Pace is understood to be vying for the assets, alongside US technology businesses Technicolour and Arris, and a handful of private equity firms. Bids were due in to Google yesterday, according to the Wall Street Journal, although sources said the California-based company could extend the deadline.

The acquisition would be transformative for Pace, which experienced a difficult 2011. The company, which specialises in producing set-top boxes for televisions, was battered after flooding in Thailand wiped out one of its key hard-disc suppliers.

Analysts at Espirito Santo said there was a “strong rationale” for combining Pace and Motorola’s set-top box assets. “It would create an undisputed leader...with a 25pc market share. Furthermore, we believe that the Motorola set top box unit generates close to double digit margins.”

Pace has a market capitalisation of £592.6m - considerably smaller than the value of Motorola’s set-top box division, thought to stand at between $1.5bn and $2.5bn. “This would be a massive, transformative deal for any one of these players,” said a source.

However, it is thought that Google would take the unusual step of helping to finance the deal. The cash-rich search giant, which paid $12.5bn for Motorola, acquired the company primarily to get its hands on its artillery of patents to help it fight various legal battles with rivals like Apple.